Freelance jobs much more crucial in workforce

Candace Portman often works from a Starbucks when she's doing contract social media work for 520 East Brands. She says she likes the flexibility that being a contract worker brings as a parent.(Photo: Matt Stone/The Courier-Journal)Buy Photo

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More than 40 percent of workers by 2020 could be freelance contractors and temps.

Candace Portman's day as a contract social media manager begins early with coffee and a laptop on her couch at home.

She runs through what's happened overnight with clients and posts items for them on Facebook and Twitter. After getting her second-grade son up and out the door to St. Martha Catholic School, she's back at work for 520 East Brands, a company that sells itself as a voice for businesses on social media.

With a husband working long hours, flexibility and a chance to work anywhere — on the flag football sidelines or at the coffee shop between meetings — are crucial. She once pulled long days as an employee, but she realized that wouldn't work for her family now.

"I really feel like I've got the best of both worlds," the 44-year-old Hikes Point resident said.

The veteran marketing and account representative is one of thousands of area residents navigating what's now dubbed the 1099 or "gig" economy — "solopreneurs" working as temps, freelancers and contractors in an array of roles for traditional businesses, startups and micro-enterprises.

At Humana, the Louisville-based health insurance giant, 13,000 "associates" on the payroll are supplemented by 2,700 contractors, the majority classified as analysts and customer service specialists who may help during new-product launches and open enrollment. Several local online job listings regularly call for contractors. One site posted work recently for a licensed mental health counselor, a welder for a manufacturer's project, a medical coder and mail insert operator.

Estimates are that by May of this year, 15 million Americans were self-employed, a boost of nearly 1 million over last year. That doesn't count the many people picking up part-time hours for extra cash. Predictions are that more than 40 percent of workers by 2020 will be freelance contractors and temporary workers.

Some self-employed contractors here, primarily millennials and those slightly older, say trade-offs abound. Being their own boss and not having to show up at an office every day are balanced against weathering dry spells for work and setting aside money for taxes and health insurance.

Numbers are up, but pay is down

Local employment records also show a 44 percent increase in the numbers of nonfarm independent workers since 2001 in Jefferson County. The data show that there were 55,080 in 2001, compared with 78,166 in 2013, the most recent period reported by the Bureau of Economic Analysis and compiled by the Kentucky Education and Workforce Development Cabinet.

The average annual wage, however, has declined among contractors, from $56,907 to $42,221 in 2013.

Among traditional workers, wages and traditional employment rolls in Jefferson County declined slightly — 944 people over the 12-year period. There were 462,154 workers in the county drawing an average wage of $45,559 in 2001. The number declined to 461,210 by 2013. And the average wages increased by slightly over 3 percent, to $47,433 when adjusted for inflation, according to the cabinet's analysis.

The shift from traditional worker to independent contractor is a decades-old phenomenon, but labor experts say the trend has picked up considerable steam here and across the country as the economy climbed out of a recession with millions of layoffs. The 1099 is a reference to the IRS tax form issued to independent contractors who earn $600 or more a year.

Companies are increasingly embracing the on-demand model because health care reform has mandated an employer provide health insurance for full-time employees. Hiring a full-timer also requires the employer to foot unemployment insurance, payroll taxes and other expenses. If a company needs workers for short-term assignments or a specified number of hours of work weekly, high-speed Internet connections have paved the way to allow people to do technical writing, field customer service calls, design websites and process claims from the home or regional work sites.

Another factor driving up demand: Companies have moved call centers from overseas to the U.S., opening telecommuting opportunities for many technology-based jobs, said Stuart Johnson, vice president of DigitalWorks, which links companies to contract workers in Kentucky and 29 other states.

Labor law cases will help clarify

Such a fundamental transformation in the definition of jobs and employment has come under sharper scrutiny by labor law experts, policy makers and employers following recent lawsuits brought by people demanding benefits and worker protections.

One action involved a driver who challenged the ride-sharing business Uber. A California agency ruled that the driver is an employee, not an independent contractor.

It's triggered debates among political leaders, workforce development boosters and advocates about what's ahead for workers when they have to save for self-employment taxes, plan for retirement and earn a stable income. Unquestionably the local statistics indicate that there has been a decline in what's classified as traditional full-time jobs while the numbers of 1099 jobs have soared, said Ron Crouch, director of research and statistics for Kentucky Career Centers.

Still, it's unclear whether those positions are full-time or second jobs, he said. The trend is worrisome because the arrangements put the burden on the worker to carry health insurance, save for retirement and have enough in reserve if there's a shortage of work. "Down the road, are we going to find a bunch of people who haven't saved enough for retirement?" Crouch said.

Cameron Deeb, a longtime freelance designer who recently took a full-time job with a health care company, said he and peers in their late 30s are less focused on what their post-65 years will hold financially. Many freelancing part time and full time "forgo the retirement idea. ... My generation knows Social Security is not going to be around. They don't understand why they should have to pay into it anyway."

From an owner's point of view, 520 East Brands founder Shane Shaps said, she's never considered creating a traditional office and hiring full-time employees to staff it, though that could happen someday. She pays $18 to $22 an hour to Portman and other associates, depending on experience. Bonuses go to managers when accounts renew contracts for another year.

Her crew of eight includes her husband, six social media managers and an outsourced executive assistant. All except Portman hold down other jobs around the part-time marketing gig.

The key is flexibility for her and her team, Shaps said. She can run off and drive carpool in the afternoon, something that wouldn't be possible operating a traditional workplace. "The overhead scares me, plus the HR and all the issues. For our corporate culture, this really works."

The same attitude wove through Uber driver Sharon Marra's views on being an independent contractor. The 58-year-old single woman from Jeffersonville, Ind., drives her Chrysler 300 on weekends to pick up extra cash. In 15 months, she paid off $3,000 in medical bills.

The cash supplements her salary as a bid analyst for a transportation company at Riverport, she said, so she's less concerned that Uber doesn't pay benefits. The responsibility for setting aside money is hers, not Uber's. "I've gone in with my eyes wide open."

Reporter Grace Schneider can be reached at 502-582-4082 or by email at gschneider@courier-journal.com.

WAGES AND WORKERS IN JEFFERSON COUNTY

Wage and Salary Employment

2001: 462,154

2003: 445,669

2005: 451,630

2007: 463,580

2009: 439,631

2011: 441,170

2013: 461,210

Change: ‐944

% change: ‐0.20%

Nonfarm Proprietors Employment

2001: 54,080

2003: 58,473

2005: 65,160

2007: 72,512

2009: 73,414

2011: 77,310

2013: 78,166

Change: +24,086

% change: 44.54%

Independent contractors

Independent contractors or freelancers, as a percentage of employees paid hourly or salary, are becoming a bigger part of Jefferson County's workforce